As we previously reported here, in 2016, the U.S. Equal Employment Opportunity Commission (“EEOC”) changed the pay data reporting requirements under the EEO-1 report, requiring employers with 100 or more employees to annually report employees’ IRS Form W-2 compensation information and hours worked. However, in 2017, following President Trump’s election, the OMB indefinitely stayed the deadline for employers to comply with the Obama-era revisions to the EEO-1 form, pending review of the potential burdens of such data collection under the Paperwork Reduction Act. (See our prior post here).

The stay remained in place until Judge Chutkan of the U.S. District Court for the District of Columbia released her March 4 order rejecting the OMB’s decision to stay the pay data collection requirement. The court reasoned that the OMB failed to prove either that relevant circumstances regarding the data collection had changed, or that the original burden estimates were materially in error. Further, the court held that the stay was arbitrary and capricious. Therefore, the judge ordered that “the previous approval of the revised EEO-1 form shall be in effect.”

The order leaves many open questions concerning how or when employers will be required to respond. The EEOC’s EEO-1 survey will open on March 18, 2019, and the deadline to submit EEO-1 data has been extended to May 31, 2019. It is still unclear whether the EEOC will require employers to submit the pay data information on that deadline, or if the pay data reporting will begin in a future filing cycle. Also, an appeal of the judge’s order lifting the stay is likely, and with that appeal could come a reinstatement of the stay. As this issue is ongoing, we will keep you updated as more developments arise.

]]>https://www.employmentlawworldview.com/federal-judge-reinstates-eeo-1-pay-data-collection-requirement-impact-on-employers-still-unclear-us/feed/0melissa.legault@squirepb.comDéjà Vu All Over Again: U.S. Department of Labor Previews New(-ish) FLSA Overtime Exemption Requirements (Again)https://www.employmentlawworldview.com/deja-vu-all-over-again-u-s-department-of-labor-previews-new-ish-flsa-overtime-exemption-requirements-again/
https://www.employmentlawworldview.com/deja-vu-all-over-again-u-s-department-of-labor-previews-new-ish-flsa-overtime-exemption-requirements-again/#respondThu, 07 Mar 2019 23:26:22 +0000https://www.employmentlawworldview.com/?p=7354Continue Reading]]>For years – spanning two Presidential administrations – employers have been awaiting long-anticipated updates to the overtime exemption regulations to the Fair Labor Standards Act (FLSA). Since 2004, to be exempt from the FLSA’s overtime compensation requirements under the so-called “white collar” exemptions (e.g., executive, administrative, professional employees), employees must be paid on a salary basis at least $455/week as well as perform specific, defined exempt duties. In 2016, during the latter stages of the Obama administration, the Department of Labor announced that it was implementing new regulations that would raise the salary threshold requirement to $913/week, a substantial increase that would have resulted in as many as four million exempt workers being reclassified to non-exempt overnight. But on November 22, 2016, shortly after the Presidential election, a federal district court judge in Texas enjoined the new salary threshold rule and, despite some further (and still ongoing) appellate skirmishing, effectively invalidated its implementation.

Since then, employers have looked to the present administration wondering whether, when, and to what extent the FLSA regulations may change. After much speculation, the Department of Labor released on March 7, 2019 a proposed rule to amend the overtime regulations. Under the proposed rule, workers who earn less than $679 per week ($35,308 per year) would be automatically eligible for overtime for all hours worked beyond 40 hours per workweek. This is an increase from the current threshold, but not as high as the threshold proposed by the Obama administration. Further, the salary threshold would be revisited every four years through new proposed rulemaking, rather than subject to an automatic annual lockstep increases as the Obama administration had endorsed.

The new proposed threshold incorporates methodology used in 2004, under the Bush administration, for determining which workers should, based on wages alone, be treated as overtime-eligible, but has been adjusted to reflect current average wages. Because the methodology has survived scrutiny for so many years, the new proposed rule may be less susceptible to judicial challenge for overreach than the Obama-era proposal. And, although not as sweeping as the prior proposed rule, if enacted, the amended regulations may result in as many as one million workers becoming overtime-eligible. There is no anticipated change to the duties tests, so reclassification – if any – will be based on salary alone. After a period of notice and comment rulemaking, a final version is expected shortly before the 2020 election. We will continue to update you as the rule advances and if and when it is adopted, along with advice on how to implement cost-effective business solutions to minimize the added costs associated with this change.

]]>https://www.employmentlawworldview.com/deja-vu-all-over-again-u-s-department-of-labor-previews-new-ish-flsa-overtime-exemption-requirements-again/feed/0laura.robertson@squirepb.comDepartment of Labor Says Employers Are Not Required to Pay Tipped Employees the Full Minimum Wage for Non-Tipped Activities (US)https://www.employmentlawworldview.com/department-of-labor-says-employers-are-not-required-to-pay-tipped-employees-the-full-minimum-wage-for-non-tipped-activities-us/
https://www.employmentlawworldview.com/department-of-labor-says-employers-are-not-required-to-pay-tipped-employees-the-full-minimum-wage-for-non-tipped-activities-us/#respondTue, 19 Feb 2019 23:50:00 +0000https://www.employmentlawworldview.com/?p=7328Continue Reading]]>Under the Fair Labor Standards Act (“FLSA”), employers are required to pay non-exempt employees a minimum hourly wage of $7.25. However, employers with “tipped employees” are able to pay such employees a cash wage of $2.13 per hour and take a “tip credit” toward their minimum wage obligation to make up the difference between the cash wage and the federal minimum wage. Importantly, the FLSA differentiates between tipped employees who perform “dual tasks,” such as incidental duties that do not produce tips, and employees who have a “dual job,” meaning they are employed by the same employer to do both a tipped job and a non-tipped job. The U.S. Department of Labor’s Wage and Hour Division (“WHD”), charged with enforcing the FLSA, recently changed its position on when employers must pay employees with “dual tasks” the full minimum wage for time spent on non-tipped activities.

On November 8, 2018, WHD issued an opinion letter stating that employers are allowed to pay tipped employees a tipped wage less than the federal minimum wage for hours spent on non-tip-producing duties that are incidental to their main job. Previously, the WHD operated under an Obama administration mandate known as the “80/20” rule, which required employers to pay tipped workers the full minimum wage for time spent on side-work duties that do not result in tips (such as filling saltshakers and rolling silverware) when those duties make up at least 20 percent of the worker’s weekly hours. WHD’s Department’s November 2018 opinion letter altered this policy, explaining that employers are not required to pay tipped employees minimum wage for hours spent on non-tip-generating work incidental to their main job.

On February 15, 2019, WHD issued two new guidance documents supporting the position outlined in the November 2018 opinion letter. First, it revised its internal Field Operations Handbook (at section 30d00(f)) and updated its website to be consistent with its new enforcement policy. In addition, it released Field Assistance Bulletin 2019-2, which explains WHD’s reasons for the policy change, among them, that the previous policy created confusion regarding whether federal law requires certain related, non-tipped duties to be excluded from the tip credit. Further, the bulletin states that the new interpretation applies to investigations both prospectively and retroactively, meaning that the change could impact ongoing litigation between tipped workers and their employers.

WHD’s new policy likely will provide more clarity for employers with tipped workers. However, it is important for these employers to remember that they are still prohibited from keeping tips received by their employees, regardless of whether the employer takes a tip credit under the FLSA. Further, employers are still required to make up the difference if an employee’s tips combined with his or her direct (or cash) wages do not add up to the minimum hourly wage of $7.25 per hour. Finally, this policy clarification applies only to interpretations of the FLSA; state minimum wage laws may differ, so employers are encouraged to consult with local counsel to ensure that they are compliant with both federal and state wage payment laws.

The Massachusetts Noncompetition Agreement Act (see link, at Section 24L) (“MNAA”) effective October 1, 2018, places new restrictions on the length and applicability of non-compete agreements between employers and employees who work within the state of Massachusetts. (Note that the law defines employees to include independent contractors.) Post-termination non-competes are prohibited for (1) non-exempt employees, (2) employees who are terminated without cause (including as a result of a layoff), (3) interns and (4) minors. For other employees, non-competes are significantly restricted. First, non-competes are limited to a term of one year (except in the event of an employee breach of fiduciary duty to the company or theft of company property) and employers must compensate employees during this period of non-competition. The MNAA also limits the geographic scope of non-competition agreements and the types of post-termination activities employers may prohibit during the period of non-competition. Finally, the law imposes certain notice requirements upon employers. New employees must receive notice that a non-compete agreement will be required as a condition of their job offer either (1) before the job offer is communicated, or (2) 10 days prior to their first day of work, whichever is earlier. Existing employees subject to a new non-compete agreement must have at least 10 days to review the agreement.

Another new Massachusetts state law, referred to as the “Grand Bargain” due to the compromise reached through its enactment among various interested parties, contains several provisions affecting employers. First, the law establishes a higher minimum wage for all hourly employees. The state minimum wage for regular hourly workers, which is currently $11.00, will increase to $12.00 as of January 1, 2019, and gradually thereafter to a maximum of $15.00 by 2023. Tipped hourly employees, whose currently hourly minimum wage is $3.57, will see an increase to $4.35 on January 1, 2019, and gradually thereafter to $6.75 by 2023.

The Grand Bargain also eliminates the requirement for retail employees to be paid premium pay for work on Sundays and certain holidays; the premium pay requirement first decreases on January 1, 2019 (from 1.5 to 1.4 times the regular rate) and then decreases gradually over the next five years; it will be eliminated entirely by 2023.

Finally, the Grand Bargain establishes a state-wide program for paid family and medical leave. Effective January 1, 2021, employees may take:

Up to 12 weeks/year of family leave to bond with a newborn, newly adopted, or recently placed foster child, or to care for a family member with a serious health condition.

Up to 26 weeks/year of leave to address a qualifying emergency due to a family member’s call to active military duty, or to care for a family member who is a covered military service member.

Up to 20 weeks/year of medical leave per year for their own serious health condition.

While family, military, and medical leave are each considered separate leave allowances, not exclusive to one another, under the law, employers are only required to provide a maximum of 26 weeks of leave, in the aggregate, in any one benefit year. Wage replacement during these leaves is paid through a state trust fund, managed similarly to state disability benefits funds. Leaves under this law are job protected.

Earlier this year, Austin, Texas enacted a new city ordinance, under which all employees who work a minimum of 80 hours per calendar year within the City of Austin are entitled to accrue and use paid sick leave at a rate of 1 hour of leave for every 30 hours worked. Accrual and use of paid sick leave are both subject to annual caps, based on the employer’s size. Employers with 16 or more employees must provide a minimum of 64 hours of paid sick leave; employers with 1 to 15 employees must provide a minimum of 48 hours of paid sick leave. Employees may use paid sick leave for: (1) their own or a family member’s physical or mental illness, injury or health condition, or preventative treatment, or (2) absences due to medical treatment, relocation, or legal proceedings arising out of themselves or a family member being a victim of domestic or sexual abuse, or stalking.

The Austin ordinance was supposed to go into effect on October 1, 2018 for employers with 5 or more employees (October 1, 2020 for employers of up to 4 employees), however, on August 17, 2018 the Texas State Appellate Court temporarily enjoined the ordinance pending resolution of an appeal filed by parties including the Texas State Attorney General and employer interest groups. The lawsuit, originally denied on the merits by the Texas state trial court, alleges the ordinance violates state minimum wage laws. In granting the plaintiff’s injunction, the Appellate Court noted it was not ruling on the merits of the claim.

On August 16, 2018, just one day before the Texas Appellate Court ruling on the Austin sick leave ordinance, San Antonio City enacted its own paid sick leave ordinance, which largely mirrors the Austin sick leave ordinance. San Antonio’s ordinance is scheduled to become effective January 1, 2019. Smaller employers (5 or fewer employees) have until August 1, 2020, to comply. Given the ordinance’s similarity to Austin’s, it is likely destined for the same fate, whatever that ends up being.

Duluth, Minnesota Paid Sick Leave Ordinance

Following in the footsteps of the Twin Cities, Duluth, Minnesota enacted a paid sick leave and safe time ordinance that becomes effective on January 1, 2020. The law applies to all private employers with 5 or more employees nationwide. Workers are covered if they spend 50% of their work time performing services in Duluth or are based in Duluth. Under the law, employees accrue 1 hour of paid sick leave for every 50 hours worked, up to a maximum of 64 hours per year. Employees are limited to using 40 hours of sick leave per year, and may rollover up to 40 hours of accrued, unused leave to the following year. As with other sick leave laws, leave may be used for absences resulting from: (1) their own or a family member’s physical or mental illness, injury or health condition, including any diagnosis or preventative treatment; or (2) absences due to domestic or sexual abuse, or stalking.

New Jersey’s new Paid Sick Leave Act, which preempts the 13 local sick leave laws in New Jersey, becomes effective on October 29, 2018. Under the law, employers must provide 1 hour of paid sick leave for every 30 hours worked, but may cap accrual and use of this paid leave to 40 hours per year. Up to 40 hours of accrued, unused sick time carry over to the subsequent year. As with other paid sick leave laws, leave can be used for absences due to: (1) diagnosis, treatment, care, or recovery from their own or a family member’s physical or mental health condition, or for preventative care, (2) themselves or a family member being a victim of domestic or sexual violence, (3) the closure of the employee’s workplace or their child’s child care or school, if either are due to a public health emergency, or (4) school-related conferences, functions, or events for the employee’s child. Notably, employers who take adverse action against an employee within 90 days of an exercise of rights under this law are presumed to have retaliated against the employee, absent sufficient evidence to the contrary. Additionally, an employer’s failure to properly record leave time accrual and usage may result in a presumption that they failed to provide required leave.

New York City Sexual Harassment Mandatory Posting and Information Sheet Now Available

As you may recall from our prior post, beginning on April 1, 2019, New York City employers with 15 or more employees must establish policies and annual training meeting the requirements of the “Stop Sexual Harassment in NYC Act.” In connection with that law, on September 6, 2018, New York City employers must post new sexual harassment rights and responsibilities posters in English, Spanish, and other languages as applicable, and distribute an information sheet to employees at the time of hire. The New York City Commission on Human Rights has now released a copy of the mandatory posting, as well as the required information sheet.

Maryland Sexual Harassment Protections

Maryland enacted the Disclosing Sexual Harassment in the Workplace Act of 2018, which addresses contracts commonly used by employers to limit the potential exposure and publicity of sexual harassment claims. First, the law provides that, effective immediately, any provision in an employment contract or policy that requires employees to waive any future substantive or procedural right relating to a claim of sexual harassment or retaliation for exercising rights based on actual or potential sexual harassment is null and void. This includes the right to sue in court, making mandatory arbitration agreements that include claims of sexual harassment invalid under state law. (Note, however, that the Federal Arbitration Act, which the Supreme Court ruled protects employer arbitration agreements, may be found in the future to preempt this state law.) The Maryland law prohibits employers from taking adverse action against any employee who refuses to sign an agreement with an illegal waiver provision. The second component of this law requires all employers with 50 or more employees to provide a survey to the Maryland Commission on Civil Rights on July 1, 2020, and again on July 1, 2022, that includes the following: (1) the number of settlements it has entered into with an employee after the alleged sexual harassment, (2) the number of times in the past 10 years an employer has paid a settlement to resolve harassment allegations against a particular employee, (3) the number of settlements made after allegations of sexual harassment that contained confidentiality provisions, and (4) whether the employer took personnel action against any employee subject to any such settlement agreements. Employers’ survey submissions will be made available to members of the public, upon request.

Vermont Sexual Harassment Laws Designed to Increase Disclosure

The State of Vermont has also made efforts to eliminate sexual harassment in the workplace by passing An Act Relating to the Prevention of Sexual Harassment, which aims to increase accountability of employers subject to sexual harassment claims and settlement agreements. The law (which went into effect July 1, 2018), provides that agreements to settle a sexual harassment claim cannot contain a termination or no-rehire provision, and must expressly state that the agreement does not prohibit the employee from participating in any government or legal proceedings or exercising other legally-protected rights regarding sexual harassment claims. The law also prohibits employers from requiring employees to sign agreements as a condition of employment that waive rights to oppose, disclose, report, or participate in sexual harassment investigations, or other legally-protected rights or remedies provided under state or federal law regarding sexual harassment. Additionally, the law requires employers to provide a copy of the written sexual harassment policy to new employees at the time of hire and to promptly distribute any updates subsequently thereafter.

On July 26, 2018, the California Supreme Court ruled in Troester v. Starbucks Corporation that the federal de minimis doctrine does not apply to a California employee’s class action wage claims. This ruling will have widespread impact, particularly on those employers with large numbers of non-exempt employees such as retailers and food service providers, as employers are now required to pay employees for even the small amounts of time spent on incidental work that occurs prior to clocking in or after clocking out.

The employee in Troester, a non-exempt Starbucks supervisor, argued that Starbucks should pay him for the roughly 4 to 10 minutes each day he spent on tasks related to closing the store after clocking out. These tasks included activating the alarm, exiting the store, locking the front door, walking coworkers to their cars pursuant to Starbucks’ safety policy, and other occasional tasks such as letting an employee back into the store to retrieve a forgotten item. The Court noted that over the 17 month period of employment, Troester’s time spent performing these unpaid tasks totaled approximately 12 hours and 50 minutes or about $102.67 in lost wages.

Starbucks argued that the federal Fair Labor Standards Act’s de minimis doctrine applied to this case and excused Starbucks’ nonpayment of wages for these small amounts of otherwise compensable time. The Court first rejected Starbucks’ argument, finding that the Labor Code and the Industrial Welfare Commission’s (IWC) wage orders had not adopted the federal de minimis doctrine. In support of its findings, the Court pointed to the language contained in these statutes and regulations which emphasize that hours worked includes “all the time the employee is suffered or permitted to work.” By emphasizing that it includes “all” time, the Court found that California law is more protective than federal law when it comes to payment of wages.

Second, the Court rejected Starbucks’ argument that the Court should recognize the de minimis rule in light of the fact that it is part of the “established background of legal principles” upon which the Labor Code and IWC wage orders have been enacted. In its ruling, the Court found that the Labor Code and the IWC wage orders are clearly concerned with small amounts of time given that employees receive 10 minute rest breaks. Along with this observation, the Court noted that it implicitly rejected a de minimum intrusion of such time in Augustus v. ABM Security Services, Inc. The Court also found support for its holding because the IWC wage orders amended its language demonstrating an intent to depart from the federal standard for waiting time and other forms of travel time. The federal Portal-to-Portal Act relieves employers from paying minimum wages or overtime for certain activities such as walking to the actual place of performing the principal activity for the employer and other preliminary or postliminary activities. In response, the IWC amended its wage orders such that hours worked included these activities. In doing so, the Court found that the IWC intended for employers to pay employees for these small amounts of time. Finally, the Court noted that the modern availability of class action lawsuits and technology advances in employer timekeeping methods both undermine the de minimis doctrine.

This case will spark a new wave of California class action lawsuits focusing on those previously uncounted minutes and perhaps even seconds of time worked by an employee. With this risk of increased exposure, employers should review their timekeeping policies and procedures. Employers should also analyze each non-exempt employees’ duties and responsibilities and minimize the risk of any off-the-clock work.

As we blogged earlier this year, in March 2018, the United States Department of Labor (DOL) announced a new program, referred to as PAID (or, Payroll Audit Independent Determination), under which employers may voluntarily apply for DOL assistance in resolving potential claims for wage underpayment under the federal Fair Labor Standards Act (FLSA). As previously discussed in our blog post, this pilot program will last six months, during which time the DOL will analyze how well the program meets the DOL’s desired goals, which include seeking to resolve wage claims faster, more thoroughly, and more cost effectively.

The DOL began accepting applications for the program on April 3, 2018. Also on that date, the DOL posted additional details on its website about the program. Some of the key points are:

The application process begins on the DOL website and requires employers to first participate in an on-line review of FLSA compliance materials. To gain access to these materials, employers must provide identifying information, including company name.

The DOL states that applicants not accepted into the program will not become subject to DOL investigation as a result of the information provided in the application unless there is a “health or safety risk.”

The DOL anticipates applicants will have a final claims determination within 90 days. Any employees to whom the DOL determines back wages are due must be paid by the end of the employer’s next pay period following the determination.

Any back wages owed to former employees that cannot be located will be sent to the United States Treasury.

Employers who participate in PAID but choose to privately resolve any related wage claims outside of the DOL process will not be able to obtain effective waivers of those employee’s FLSA claims, as such waivers require DOL approval.

Employers cannot resolve state wage claims simultaneously through PAID but may seek to resolve those claims separately with each employee.

Records pertaining to the PAID program, including applications and resolution documents, are not confidential and may be subject to the same Freedom of Information Act requests (and defenses) as other DOL investigation documentation.

Despite these clarifications, many employers are understandably wary about participating in the PAID program. As we mentioned previously, employees are not required to accept wage payments offered by employers through the PAID program, and may instead choose to pursue their federal claims in court, and thereby seek additional financial remedies. Employers also are concerned that notification to employees of past federal wage law violations may trigger mirrored claims against them under applicable state laws, which may have longer statutes of limitations than the FLSA’s two-year or three-year filing periods (e.g., state wage claims in New York and California, respectively, have six-year and four-year limitations periods). In any event, employers are advised to consult with legal counsel before engaging in an internal wage audit, which will help ensure the audit’s accuracy, legality, as well as allow employers to seek privileged legal advice on these issues.

]]>https://www.employmentlawworldview.com/us-dols-voluntary-wage-underpayment-reporting-program-paid-now-underway/feed/0daniel.pasternak@squirepb.comU.S. Department of Labor Announces New Pilot Employer Self-Reporting Program To Address Overtime and Minimum Wage Violations (US)https://www.employmentlawworldview.com/u-s-department-of-labor-announces-new-pilot-employer-self-reporting-program-to-address-overtime-and-minimum-wage-violations-us/
https://www.employmentlawworldview.com/u-s-department-of-labor-announces-new-pilot-employer-self-reporting-program-to-address-overtime-and-minimum-wage-violations-us/#respondThu, 08 Mar 2018 19:09:05 +0000https://www.employmentlawworldview.com/?p=6503Continue Reading]]>On March 6, 2018, the U.S. Department of Labor (“DOL”) announced a new, nationwide pilot program which it claims will facilitate quick and efficient resolutions of Fair Labor Standards Act (“FLSA”) minimum wage and overtime violations by allowing employers to promptly pay back wages to employees and at the same time avoid time consuming litigation and fines. Cleverly named the PAID program (which stands for Payroll Audit Independent Determination), it will permit employers to self-report if they believe they have made errors in wage payments to employees under the FLSA. The DOL’s Wage and Hour Division will then assess the potential violations to determine how much the employer owes in back wages, and oversee the payments to any current or former employees to whom these payments are owed.

Under the program, employers will be expected to pay 100% of all outstanding wages owed. In other words, the PAID program does not provide an opportunity for employers to reach a compromise with employees on disputed wage claims. However, employers who participate in the program and resolve outstanding underpayments will be exempt from paying liquidated damages (which under the statute are an amount equal to the wage underpayment), penalties, and attorneys’ fees, which can often result from an enforcement action for FLSA violations.

Wage underpayments that are resolved through the PAID program will be considered final, and employees who elect to participate will be required to waive their rights to private legal action for the period of time addressed by the program. (There remains an open issue, however, as to whether the waiver will be as to all potential back pay claims, including those that could be brought under state law, or only under the FLSA.) However, employees are not required to resolve their wage underpayments through the PAID program, and they may choose to forgo any payments offered and thereby retain their private right to action against the employer (including any right to penalty payments). Furthermore, participation in the program will not foreclose a subsequent DOL investigation into an employer’s pay practices for other periods of underpayment not resolved through the program. Wage claims already subject to threatened or existing litigation, or under DOL investigation, may not be resolved through the PAID program, however, those employers may self-report about other potential violations not involved in those disputes.

Critics of the program express concern that employees will not get their statutorily-owed remedies, however, the DOL counterargument is that the PAID program serves to encourage employer compliance with the FLSA and ensure employees are promptly paid all wages owed. Secretary of Labor Alexander Acosta emphasized the PAID program serves to encourage employers to remedy existing underpayments to their employees, who without this program have no way of ensuring such resolutions without risking the potential of a legal battle and significantly more expense.

The program is only temporary at this point; it is set to last, initially, for just six months. At the end of this period, the DOL has said it will evaluate the program’s success and determine whether to continue it in the current or some modified form in the future. The program does not have an official start date, but check back here on our blog for updates once the DOL releases additional information. You may also subscribe here to receive email updates directly from the DOL.